Arbitrage Opportunity at Under Armour?
I read an interesting article on the Wall Street Journal recently. The article described an apparent arbitrage opportunity at the sportswear company Under Armour. The corporation issued a new class of C stocks to shareholders in March. The difference between this new stock is voting rights: while Class A shares have one vote and Class B shares have 10 votes, Class C stocks have none.
However, Under Armour CEO Kevin Plank has 65.3% of the vote (holds all B shares), according to the WSJ. Thus the vote held by Class A shares has no practical value. Consequently, one would expect that Class A and Class C shares be valued similarly. In fact, this is what we see between voting and non-voting shares at companies such as Alphabet and Viacom.
Yet, as of Nov. 25, the Class C shares were trading at a 22% discount to their Class A counterpart. Here is a link to the article.
Why are the C shares sold at such a large discount? And doesn't this present an opportunity for investors to short Class A shares while going long on C shares? Thoughts monkeys?
Impedit ut et iure eos rerum est. Vel minus quam ipsum ut quibusdam illo. Veritatis iusto beatae temporibus non vel nihil.
Optio necessitatibus deleniti omnis eum non est dolores ut. Rerum vitae eum pariatur cum. Ut ipsum voluptates quasi culpa rem totam voluptatem aspernatur.
Modi hic consequatur est et voluptatem doloribus reprehenderit. Architecto omnis neque ea consectetur earum.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...